In a report published Monday, Topeka Capital Markets analyst Gabriele Sorbara reiterated a Buy rating on Magnum Hunter Resources Corp. MHR, and raised the price target from $6.50 to $8.50.
In the report, Topeka Capital Markets noted, “While MHR shares have significantly outperformed (up 55.9% since our top pick status on August 22, 2013 vs. peers at 15.5%), we continue to see upside from its asset base and the optionality it provides via potential asset sales and/or JVs. We have discussed several assets earmarked for sale (non-core assets, Eureka Hunter midstream, Utica JV); however, we also believe MHR has the option to sell down a portion of its Marcellus assets. We believe the recent move higher is attributable to speculation around upcoming asset sales, which do not come as a surprise to us, given its rich asset base in the Marcellus/Utica. In this note, we revise higher our RNAV to $10.25 following recent non-core asset sales and as we ascribe greater value to its Marcellus/Utica assets (still at a significant discount to peers). Consequently, we are raising our price target to $8.50 (from $6.50).”
Magnum Hunter Resources Corp. closed on Friday at $6.33.
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